Samsung, the world’s largest smartphone maker has been growing at a steady pace since 2009. However, the most recent quarters have not been that good for the South Korean giant. After recording a decline in the earnings for the first time two quarters back, the company has continued the trend and the most recent quarters too show declining sales and profits.
The quarterly results which were announced earlier today showed an operating profit of 7.2 trillion won ($7.1 billion USD) and sales of 52 trillion won ($51.4 billion USD). This means the profit declined by 24.5% as compared to the same quarter last year along with a 9.4% sales decline. Even when we compare these figures to the most recent quarters, they are disappointing.
Samsung attributed its poor performance in the quarter to sluggish demand for smartphones. According to the company, the competition has toughened in the European and Chinese markets, which has adversely affected the sales of its medium and low end smartphones in the region.
Further, the demand for tablets has not been impressive, which led to a decline in the sales of the company’s tablet range. This was mainly due to the longer replacement cycles of these devices, as users tend to replace them only after two to three years of purchase. To make things worse, the strong Korean currency as compared to USD and euro has reduced its earnings.
Given that Samsung relies a lot on its smartphone range, especially the galaxy family for a major part of the revenue, a slowdown in the industry will adversely affect the profitability of the company. This is
exactly what’s happening in the most recent quarters. However, things might change for the good in the coming quarters as the companies enters new markets and releases new products like Galaxy Gear Live.
Moreover, Samsung said that it expects better results in the coming quarter as they release several new smartphones in the market. Samsung could be referring to Galaxy Note 4 or the rumored Galaxy F, when they said this. However, sales alone may not improve the quarterly results this year. In this regard, Samsung said that they would be reducing the allocation of funds for marketing in the coming quarter.
Samsung isn’t the only company who is affected by slow sales and increased competition. Apple too has seen declining smartphone market share in the past few quarters and the combined share of both these giants have decreased from 50% a year back to 47% in the recent times.
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